NEW YORK — Kenneth Cole Productions Inc. on Tuesday reported that strong revenue growth sent profits soaring in the fourth quarter.
For the three months ended Dec. 31, the New York-based footwear, apparel and accessories marketer reported net income shot up more than threefold, or 279.7 percent, to $8.4 million, or 41 cents a diluted share. That compares with last year’s earnings of $2.2 million, or 11 cents. Earnings per share easily eclipsed the Wall Street forecast of 36 cents.
Net revenues for the period rose 13.6 percent to $108.5 million from $95.5 million a year ago. By segment, wholesale revenue increased 23.5 percent to $53.7 million from $43.5 million last year. Consumer direct revenues spiked 5.5 percent to $54.7 million from $51.8 million, driven by a comparable-store sales gain of 1.3 percent. Licensing revenues rose 73.6 percent to $8.9 million from $5.1 million in the year-ago period. Cole said the majority of the company’s long-standing licensed products performed well and contributed to the increase, as did the incremental royalties received from newer licensees such as children’s wear and fragrance.
"We had a very good holiday season with all three divisions contributing," said chief executive officer Kenneth Cole on a conference call with analysts. "We concentrated on four key areas in 2002: product, brand image, inventory management and diversification. Our intense focus on design and product, improved inventory controls and an increasingly diversified brand, gender and channel mix has enabled us to respond to growth opportunities as they became available in this difficult market."
Greater efficiency also added to the bottom line, as gross profit as a percentage of net revenues expanded 470 basis points to 45.8 percent from 41.1 percent a year ago. Selling, general and administrative costs also improved, falling 350 basis points to 34.3 percent of revenues from 37.8 percent in the prior year.
Figures were released after the markets closed Tuesday, but shares added $1.04, or 4.2 percent, to close at $25.79 in New York Stock Exchange trading.
Overall, for the full fiscal year, KCP said net income rose by more than half, or 57.3 percent, to $26.1 million, or $1.27. That compares with last year’s profits of $16.6 million, or 80 cents. Net revenues for the year increased 10.5 percent to $404.3 million from $365.8 million last year. Additionally, gross margin improved to 45.7 percent of net revenues from 44 percent in fiscal 2001.Looking ahead, KCP said it is likely to report first-quarter EPS in the range of 30 to 32 cents on revenues of $106 million to $110 million.
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